The majority (58 per cent) of pension professionals intend to adopt new defined benefit (DB) surplus flexibilities, according to polling from XPS Group.

The snap poll, conducted during an XPS webinar and attended by around 200 trustees, employers and pension managers, examined the upcoming DB surplus flexibilities and how schemes could make use of them.

The findings also showed that 75 per cent of respondents expect to set a surplus release threshold above the low-dependency or buyout level, incorporating an additional buffer.

In addition, 75 per cent of respondents said they believe members should receive a share of the surplus, although XPS said views varied widely on the appropriate amount.

Meanwhile, a panel discussion with The Pensions Regulator and other industry professionals focused on the importance of setting a surplus policy to agree the key elements needed to use the new flexibilities effectively.

The panel also discussed the opportunities for schemes to benefit from the new flexibilities, whether they intend to run on for the long term or secure benefits with an insurer.

XPS Group head of DB run-on, Tom Froggett, said: “It is highly encouraging to see a clear majority of schemes already intending to adopt the new DB surplus flexibilities.

“As trustees and employers look ahead to the April 2027 implementation date, the focus now needs to shift to putting the right frameworks in place, with well-defined and documented surplus policies at their core.

“There are still important legislative and regulatory details to be finalised, and getting the balance right between member security and employer flexibility will be crucial in ensuring this strong initial appetite translates into widespread adoption.”

Froggett noted that it was also encouraging to see a high proportion of respondents intending to include funding buffers when setting the level at which to release surplus.

“In our experience, trustees and employers are generally aligned on running these buffers rather than extracting surplus at the lowest possible threshold, helping provide security for members and stability of surplus flows for employers and trustees,” he continued.

“All schemes, whether they are looking to insure or run on for the long term, can investigate how the new surplus flexibilities can support their objectives.

“For example, we are seeing many schemes looking to use the new flexibilities between the point of insurance buy-in and buyout to accelerate refunds of surplus to the sponsoring employer where appropriate.”

Froggett added that views on how surplus should be shared with members remain more varied.

“This is ultimately a scheme-specific decision, and trustees and employers will need to approach these discussions with a clear strategy to ensure the overall arrangement meets their respective objectives."

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